The country on the verge of famine - where $6bn has gone missing

In part three of James Cusick's special reports on South Sudan, he explains how the country is on the verge of going bust - but not everyone is suffering

James Cusick
Juba, South Sudan
Sunday 14 February 2016 22:30
A large number of people wait for food air-drops by ICRC (International Committee of the Red Cross), outside Thonyor, in South Sudan, on February 3, 2016.
A large number of people wait for food air-drops by ICRC (International Committee of the Red Cross), outside Thonyor, in South Sudan, on February 3, 2016.

They are an incongruous sight in a neglected, run-down African capital city. Lines of smart black SUVs with tinted windows can be seen parked outside the handful of smart hotels and restaurants, or driving along the pot-holed roads that lead to grand residences, government ministries and military compounds.

The Cadillacs. Mercedes GLs and luxury Hummers would not look out of place in a Belgravia or Knightsbridge square.

But this is Juba, in war-torn South Sudan. And these in-your-face symbols of wealth are sharply at odds with the official description of a country that, although oil-rich, is among the 25 economically weakest and least developed in the world. More than four million people, a third of its population, face serious food shortages and tens of thousands are on the cusp of catastrophic famine.

South Sudan is on the verge of going bust, its dollar reserves (its only means of buying food and goods from abroad) standing at zero. Now there is an expectation that the International Monetary Fund may be asked to step in.

If so, the full extent of the endemic corruption and embezzlement of state funds by many of South Sudan’s elite, thought to total $4bn (£2.76bn) over the past five years, may be publicly exposed.

So where has the money gone? In neighbouring Kenya and Uganda, property records show some of the best houses in the smartest suburbs are registered under the names of high-profile South Sudanese politicians and bureaucrats. Many such homes are worth more than $1m.

In Washington DC, not far from headquarters of the World Bank and the IMF, the names of South Sudanese individuals or holding companies are publicly listed against homes worth more than $3m. In Colorado, where the world’s rich ski, and in Melbourne, Australia, rated one of the world’s most “liveable” cities, it is no secret that a small number of elite South Sudan business and political leaders have properties.

Details of this hidden wealth appropriated by South Sudan’s elite have been collated by United Nations investigators. Their data was examined at the highest levels within the UN during recent discussions on whether personal sanctions – including a freeze on financial assets and an international travel ban – should be brought against President Salva Kiir and his Vice-President turned opposition leader, Riek Machar.

The President’s accusation that Mr Machar organised a coup attempt in late 2013, two years after the world’s newest nation won full independence from the rest of Sudan, was the spark that began a brutal, ethnically driven civil war. The announcement last week of an unexpected rapprochement, with Mr Machar restored to his position as Vice-President and asked to return to Juba, offered hope that the conflict might soon end.

But behind the declaration of unity and a desire to honour a peace deal signed last year, there is deep panic at the country’s desperate financial position. The reality is that South Sudan has run out of money, having squandered the billions of its own oil wealth and that of international donors that were intended to help give the young, and supposedly oil-rich, state a chance.

The UN’s special representative in South Sudan, Toby Lanzer, said last year that the government was struggling to pay for even the most basic necessities; under its own rules the IMF is not allowed to intervene while the civil war continues.

Sources within the Paris Club group of creditor nations that provide debt relief to developing countries, estimate that some $4bn is missing, unaccounted for. One of them told The Independent: “There may simply be no books to examine.”

Other agencies that have tried to calculate the scale of embezzlement in what is now South Sudan say it could amount to as much as $10bn over the past 11 years.

A long-running ethnic conflict within and between Sudan and South Sudan has displaced almost 2.8 million people internally

Over the same period, 85 per cent of the oil produced in what was originally the whole of Sudan came from the region that became, on independence, South Sudan. That region had effective control over its resources from 2005 onwards, and over the 11 years since then has enjoyed oil revenues that have exceeded $8bn – in addition to billions in development aid. Yet it still has the highest per capita assistance of any African country.

Immediately after independence, a pipeline dispute with the Sudanese government in Khartoum led to a shutdown in oil production, eating into the new South Sudan’s reserves. But its treasury was already being treated as source of private wealth by the political elite, according to observers. Large sums of money were being siphoned off and distributed among those running government ministries, and military chiefs.

Rebel commanders who had previously fought for South Sudan’s independence were integrated into the fledgling state’s national army in 2011. Mr Kiir’s government appointed and paid 745 generals who each had their own network of loyalists to finance. By 2013, when the civil war erupted, the military payroll had climbed to 240,000, six times its size a few years earlier. Supposed defence spending may now consume close to half the national budget.

South Sudan's President Salva Kiir

Meanwhile senior commanders commonly steal the salaries of low-ranking personnel, while others pocket the pay of “ghost soldiers” who exist only on paper, investigators say.

So far none of this has stopped the world pouring more aid into the country. Over the past two years, the US has spent more than $2bn; China has offered extended lines of credit; and last year Qatar offered $500m to help South Sudan’s struggling banking system.

The World Bank approved a $38m loan to build rural roads and highways, but almost none of that promised work has even been started, and a country almost the size of France still has barely 60 miles of metalled roads.

Britain has contributed £242m for humanitarian aid and a further £93m to help refugees and displaced people over the past two years, with a further £200m in aid earmarked for this year. But falling oil prices combined with an inflation rate expected to exceed 200 per cent within months mean South Sudan is in economic crisis – and is approaching the status of a failed state.

Against this backdrop of civil war, economic chaos and official corruption, a humanitarian crisis is being played out. The UN and 140 international NGOs, ranging from Oxfam to the International Rescue Committee, all hope that an outbreak of peace will make it easier for them to deliver their planned $1.3bn food and assistance programme this year.

But for the long term, the world’s youngest country still has little to look forward to until the culture of corruption is ended. Angry foreign diplomats, frustrated aid workers and millions of its own desperate and impoverished people all agree that the way it has been governed in its first few years of nationhood cannot be allowed to continue.

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